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The U.S. is not in a recession, economists say, but nearly half of Americans disagree.
Forty-six percent of people responding to a March Morning Consult poll said the U.S. has entered a recession. Another 22 percent say “not yet” but expect a recession within 12 months.
Fifty-two percent of adults in households with incomes greater than $100,000 have begun stockpiling food and other items and cutting discretionary spending, they told Morning Consult.
A majority of persons in households earning less than $50,000 say they wish they could stockpile staples but are unable to.
Rising prices and higher interest rates have left Americans “feeling poorer and pessimistic” about the economy, The Hill magazine reported.
The evidence is piling up:
● Credit card debt is approaching $1 trillion, as we reported in “Credit Card Debt Nears $1 Trillion, Sets Record” (7 Feb 2023). It increased by $85.8 billion in last year’s fourth quarter, the sharpest quarterly jump on record, according to Wallethub.
● Tech giants have laid off tens of thousands of workers in recent months. Goldman Sachs also has announced plans to slash staff.
● More than half of consumers with six-figure incomes told a December Lending Club survey they live paycheck to paycheck; a more recent poll confirmed that result.
● Banks are beginning to cut back lending, as we detail in “Loan Availability Has Tightened in Key Markets, Fed Report Shows” in this issue.
● On 24 April, The Disney Co. announced it will begin laying off thousands of workers across several divisions.
Hard as it is to get by on $100,000 a year, people who earn less are seeing the worst of the economic slide.
The Atlanta Food Bank has reported a 40-percent increase in the number of people seeking help, compared to early 2022.
“We’re distributing the same volume of food as we did during the height of the [COVID War],” food bank CEO Kyle Waide told The Hill. “The increase relates to increased costs associated with inflation, along with the discontinuation of various stimulus programs” begun during the COVID era.
The North Texas Food Bank is “operating on a deficit budget,” Valerie Hawthorne, director of the pantry’s government relations, said in a Hill interview. “We’re currently working on a budget of $66 million, but we’re only forecasting $45 million in public support.” The balance would have to come from private donors.
“It’s not sustainable,” she added. “I don’t see how removing benefits that people need is going to solve the hunger problem.”
Only about 25 percent of U.S. households eligible for federal help with rent receive it due to “funding limitations,” The Hill reported. The program’s budget is discretionary—unlike Social Security, which is a mandatory cost line—and Congress has not allotted enough funds to meet the need.
In March, inflation fell to its slowest pace in almost two years. However, many consumers see “more aspects of high inflation every day,” one told The Hill.
Although experts agree the U.S. is not yet in a recession, U.S. Federal Reserve officials expect one, according to the minutes of the March meeting of the central bank’s Open Market Committee.
“Given their assessment of the potential economic effects of the recent banking sector developments, the [Fed] staff’s projection included a mild recession starting later this year,” the record stated.
The committee is expected to raise the central bank’s key interest rate by another quarter point next month, squeezing consumers even more.
TREND FORECAST: The survey’s results reflect the study we reported in “$100,000 Income, Chump Change? Can’t Afford ‘American Dream?’” (11 Jan 2022) and “Middle Class? Forget About It. Americans Need $128,000 a Year to Feel Secure” (18 Jan 2022).
The former study concluded that $100,000 likely would not be adequate to support a house in the suburbs, a recent-model car, a child or two, and a college fund for the kids.
The new Morning Consult poll’s findings add evidence that the traditional American Dream is now out of reach for most of us.
As people—especially those with education beyond high school—fall further and further behind, pressures will grow for the government to fund items that have become necessities, such as child care and post-secondary education or training. This will be a foundation for new political movements.
As inflation outpaces income, societies around the world will continue to pull apart into two groups, the well-off and those who struggle. The idea that large numbers of people will inhabit a comfortable middle class is rapidly becoming quaint.
We continue to forecast growing anti-establishment political movements in countries that are called “democracies” but are, in fact, plutocracies, in which the rich pay legislators to govern for their benefit.
These are just a few of our articles that state the facts:
● “Plantation Owners of Slavelandia Get Richer, Slaves Get Poorer”
● “Spotlight: Bigs Keep Growing Bigger”
● “COVID WAR: Rich Got Richer, Poor Got Poorer”
● “America Pumps Up the Rich, China Pushing Them Down”